How to Invest in Cryptocurrency
So, you’ve decided to invest in cryptocurrency. Maybe you’ve done your research on blockchain tech and decided that it really is the future. Or, maybe you’ve had a colleague or friend make a significant amount of money off Bitcoin and you’re kicking yourself for not thinking of it sooner.
Either way, purchasing Bitcoin, or a number of the other cryptocurrencies, which are arriving on the market today, is fun and simple to do. Here is what you need to know.
1. Open a Wallet
First thing’s first. Before you invest in cryptocurrency, you will need a wallet to store your coins.
A “wallet” is essentially the digital equivalent of a bank account. This allows you to receive and store Bitcoin, as well as send them to others.
In reality, these wallets do not physically store your coins. Rather, they contain private keys or secret codes that allow you to access your coins.
A cryptocurrency wallet is simply a device, website, or app that manages your coin’s private keys for you.
There are two primary types of wallets.
• Hot wallets
• Hardware wallets
Install hot wallets directly on a mobile device or computer. This virtual method gives you total control over your coin security. However, these wallets are still linked to the Internet. This makes them less secure.
On the other hand, hardware wallets maintain a high level of security because they are stored offline and out of hacker reach.
Popular hot wallets:
Popular hardware wallets:
2. Join a Fiat/Crypto Exchange
While Wallets store your coin’s private access keys, Exchanges are a website platform that handles the purchasing and trading of Bitcoin.
Don’t be fooled by exchanges that dual advertise themselves as “wallets”. Storing your coins on an exchange is not the same as keeping them in your personal custody. This is not a viable long-term storage solution.
An exchange is a third party facilitating the sale, and a wallet is your personal storage device.
The three most popular Fiat (government currency) to Crypto exchanges today are:
If you are interested in an exchange, be sure to check out their policies, exchange rates, and what types of coins are offered before you join.
Most exchanges require a name, email address, and password. Additionally, they will ask you to connect your bank account in order to complete your purchase.
3. Join an Altcoin Exchange Asset
Altcoins are the alternative cryptocurrencies that launched following the success of Bitcoin. These projects generally aim to improve upon any perceived limitations and shortcomings of Bitcoin.
Altcoin exchanges, however, do not accept fiat, or government currency. All trading must take place with existing and accepted cryptocurrency.
Exchanging assets on an Altcoin exchange can be an exciting way to make money quickly.
Here are 3 popular Altcoin exchanges:
4. Verification Process
Once you have your wallet and exchange accounts set up, you’re ready to invest in cryptocurrency.
However, in order to process your purchase/trade, miners on the blockchain must verify your transaction. In order to save time, transactions are not mined individually. Instead, they are mined in collective groups.
Digital exchanges set limitations on how many transactions can be processed at one time and how they are verified. Each exchange has its own set of verification conditions. Before you join an exchange, it’s important to read these details.
5. Transferring Funds Between Exchanges
Arbitrage is the trading of funds between exchanges. Any type of digital currency can be used in for trading between exchanges. However, this is only if the exchange accepts that currency.
In order to send coins from one exchange to the next, you simply need your target exchange’s deposit address or public key.
A public key is a random sequence of letters and numbers that is safe to share with others. A private key is a number and letter sequence that is kept to yourself.
Once you know your public key, go to the source of your exchange to withdraw and send your coins to the deposit address. You will use your private key to sign the message with transaction specific details.
6. Trading Assets on the Altcoin Exchange
Some Altcoin exchanges, such as Ankorus, permit the trading of traditional assets for Bitcoin. As a result, you can exchange silver, gold, options, futures, bonds, stocks, commodities, and Bitcoin futures for cryptocurrency.
This platform helps to bridge the current gap between fiat and cryptocurrency. Instead of having to find a broker-dealer first, exchange fiat currency, and then be ready to invest, you can simply invest your assets directly into cryptocurrency.
7. Converting Altcoin to Major Cryptocurrency
Altcoin trading is a fun and popular way to speculate on cryptocurrency exchanges today.
First, decide whether you want to buy or to sell. Explore asking prices (what the coin holder wants to sell the coin for) and bid prices (what someone is willing to pay).
While you may want to search and find the best available price this will make you the “taker”. In trading terms, this burdens you with the transaction fees.
If you choose, you can place a bid and see if someone is willing to come along and sell you their currency at your preferred price. In this instance, you now become the “maker” and will not endure transaction fees.
Selling your currency works the same way.
8. Converting Major Cryptocurrency to Fiat Wallet
If you have made or received any money during your cryptocurrency investing or trading, then at some point you will want to convert this money back to fiat currency.
1. If you aren’t holding a cryptocurrency that accepts fiat currency, you’ll want to trade the coins that you have for a major cryptocurrency.
2. Deposit your major cryptocurrency into an exchange.
3. Sell your coins for fiat value.
9. Withdraw Fiat Back to Banks
Once your coins have been sold for fiat currency, they can easily be linked to a valid bank account. Simply follow the instructions to link to your bank account on the exchange platform your fiat funds are located. Remember, there are transaction fees related to these fiat withdrawals as well.
When you invest in cryptocurrency, you will find that fees and other policies are not always the same. Therefore, the actual amount paid for a coin transaction will differ due to surcharges, fees, and other expenses. It’s important to read these policies fully before you decide to trade on an exchange.
Fees related to purchases may include:
• Commissions and exchange fees in the form of fiat currency are included as a percentage of every trade.
• Fees related to the payment or transaction method used.
• Fees involving the withdrawal of cryptocurrencies off of an exchange. This feed is relatively small and typically denominated in coins.
• Network transaction fees include the fees to pay miners.
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